Hot take: Bains blows smoke, no fire on telecom affordability

Telecom Affordability:

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Canadian telecom stocks were barely changed Monday morning, which should be all the read anyone needs of how disruptive Navdeep Bains’ speech was at the annual Telecom Summit Monday morning. It wasn’t.

The Ministry of Innovation, Science and Economic Development last week promised announcements that would address telecom affordability in Canada, but the minister instead delivered a lot of talk instead of walk.

He reiterated the Liberal government’s plan to examine and possibly merge the separate Telecommunications and Broadcasting Acts, announced in the March budget, and said he was watching the whole unlocking-cellphone-fee issue. There are also a few minor changes coming to satellite access.

Bains also announced the beginning of a consultation for another wireless spectrum auction which, in the long term, will likely raise prices for consumers. Network upgrades and investments are telecom companies’ go-to rationales for raising prices, so the billions they will spend in the upcoming auction is more fuel for that fire.

Bains did mention and praise the low-income broadband programs being offered by Rogers and Telus and said he’d like to see more of such initiatives. A source over the weekend said he was going to use his speech to launch a similar government initiative, but he didn’t.

Whether or not that’s because consumer and poverty groups cried foul over not being included in the planning process so far is unknown, but for now, the government says the program is “a work in progress.”

Bains’ most substantial comments centred around ordering the CRTC to revisit its recent Sugar Mobile decision.

In a nutshell, Sugar was an offshoot of Ice Wireless, which provides cellphone service over its own network in the northern Canadian territories. Ice has a deal with Rogers that lets its customers roam on Rogers’ network when they venture south into the rest of Canada.

Ice was then selling service in those southern provinces as Sugar Mobile, which primarily uses wi-fi for calls and text messages, but which also lets users hop onto Rogers’ network.

Rogers took exception to what was effectively a mobile virtual network operator (MVNO) and argued that Ice was misusing its roaming agreement, and the CRTC agreed. Its order in March effectively shut Sugar down.

It’s hard to see what the CRTC got wrong in its decision. Regardless of whether Canada should or shouldn’t have mandated MVNOs, it’s clear that Rogers gave Ice a roaming deal with the intent of letting the smaller company’s northern-based customers use their phones throughout Canada. The point of the agreement wasn’t to allow Ice to create a national low-cost MVNO.

If the CRTC upholds its decision, then cabinet will have to overturn it. But if cabinet does that, there is nothing holding Rogers’ feet to the fire. The company could simply cancel its agreement with Ice, or just not renew it when it expires, which would then mean that Ice customers could no longer roam outside their home turf.

That’s where the fun could begin, because someone – whether it would be the government or CRTC – would have to step in. Ice customers losing service could finally be the catalyst for forced, mandated MVNOs in Canada. But that’s a big if and the whole scenario will likely take several years to play out.

In his speech, Bains’ recognized the value of MVNOs – they can be innovative and lead to better affordability of services – but said nothing about actually getting them to happen in any meaningful way, any time soon.

Telecom executives and investors alike breathed a sigh of relief and resumed their busy lives.